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In the past 2 weeks, the CEOs of EA and SquareEnix have resigned in the midst of terrible end of year financial statements for both companies. SquareEnix cited 'poor sales' because it has only managed to sell 3+ million units of Tomb Raider and other titles... layoffs at SE's California offices started today..

From what I've been reading, it just seems that if not a crash then a huge adjustment is coming.

Everyone that is jonesing for new next-generation consoles (PS4 and Xbox 720) are going to be surprised when there are fewer and fewer AAA games released on those platforms and more and more indie-/mobile-/Facebook-type games flooding their consoles. It's like what Nintendo has been doing recently but for different reasons.

Nintendo needs games for the next year to year and half while Wii U game development gets going so it has opened the flood gates to independent developers. Sony (and I think Microsoft) will have to make a similar push because despite what anyone says development costs are going to be even higher with the new consoles and that means fewer not more games from traditional publishers and developers.

All of these closings and disappointing sales point to that.

Right now, it's hard to sell current gen games that aren't AAA. Some have suggested that game devs and publishers try selling their games at a discount rate of $20-30 (Enslaved: Odyssey to the West comes to mind), but that ignores that said game still cost the developer and publisher big bucks. And there is no real guarantee that selling a game at discount rate translates to consumers--save for the budget conscious and parents of course--that it is a good game. Enslaved probably wouldn't have been pilloried for not living up to whatever standard a $60 price point comes with, but a discount price comes with its own stigma.

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Originally Posted by RandomRob

In the past 2 weeks, the CEOs of EA and SquareEnix have resigned in the midst of terrible end of year financial statements for both companies. SquareEnix cited 'poor sales' because it has only managed to sell 3+ million units of Tomb Raider and other titles... layoffs at SE's California offices started today...

So far only one analyst that I've seen actually said that Tomb Raider probably cost Square Enix about $100 million to develop and would have had to sell 5 million units to break even. Take that with a grain of salt. But if true then it is no wonder that having sold 3.4 million units in a couple of months spelled catastrophy for Square Enix. Dead Space 3 was also costly for EA. It only sold under a million so far and you know that game cost EA a pretty penny.

If you can't make money selling over 3 million units of a game then you won't be around for very long. That goes for everyone and not just poorly run companies like Square Enix and Electronic Arts.

While we're on Electronic Arts, maybe this will change after the CEO change, but notice how Dead Space and Battlefield have been altered at their core so that they are more like Call of Duty or would appeal more to Call of Duty fans? Did you see the Battlefield 4 demo? Is that what Battlefield fans want from their game? It seems there are only one ortwo franchises that sell in the tens of millions and one of them is Call of Duty. With budgets where they are devs and publishers are just trying to cram their game into that mold.

This can not continue. Maybe Nintendo was right after all and companies need to abandon the graphics race? Maybe Ouya is the future? Maybe it's Steam Box or whatever Apple has in the works.

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Originally Posted by RandomRob

Disney has scrapped LucasArts, and laid off 150 people just yesteday.

I'm sort of torn when it comes to LucasArts. I remember the company when it was in its prime, but how many people still playing games today can say that? Today LucasArts makes mediocre Star Wars games, both online and off. This is the company that made a Star Wars fighting game for crying out loud. It's fall from grace began long ago and sales of its titles are camouflaged by its popular Lego Star Wars and Lego Indiana Jones titles and the hype for this Star Wars 1313. I think when it comes down to it you can dismiss this closing as the unfortunate consequence of a merger. Disney looked at the balance sheet and saw what was making money and what wasn't. LucasArts was not carrying its weight. Still sad though.

A LucasFilm representative confirmed that production on Star Wars 1313 and what's rumored to be Star Wars: First Assault has ceased following yesterday's closure of LucasArts by Disney. Speaking to the BBC, LucasFilm spokesperson Miles Perkins said, "Both current Star Wars games projects have been halted."

A LucasArts representative previously indicated to Game Informer that Star Wars 1313 could be released via external licensing. However, a Kotaku source told that site the chances of that happening are "effectively zero."

"It is worth noting that we are looking for proven external partners who can help us provide video games to our fans," the LucasArts rep told Game Informer. "We still believe in the video game industry, we still will provide Star Wars games, we're just looking at different models rather than internal production... They're evaluating everything. There's always a possibility that it [Star Wars 1313] can still come out via licensing."

The last we'd seen of Star Wars 1313 was an "inaccurate" PlayStation Germany posting, which said the game would be available on PS3 this year. Leaked materials indicated Star Wars: First Assault as a multiplayer shooter coming to XBLA, although LucasArts had yet to officially confirm the game or any details surrounding it.

Hah, I actually started a thread like this yesterday, before deciding it was all too complex and scrapping it.

On a personal level, I have bought one game from 2013 so far this year. This is highly unusual, but there just haven't been any games released that appeal to me. So here you have someone who spends a lot of time gaming, ready to throw money at games, and hasn't found anything worth buying.

Of the AAA market as a whole, of course we don't really have any solid data as to what makes a game profitable etc. As Mike's review of Dead Space 3 outlines, there seems to be a move towards homogenisation in Triple A - and of course we've seen before that risks don't pay off (Mirror's Edge). I knew I wouldn't be buying DS3 once I finished 2, and there are loads of other franchises that have just run out of steam for me.

As regards the industry as a whole - here is a business that has free advertising (the gaming press), committed developers happy to work constant crunch time for the love of their games, massively profitable digital distribution channels, free money from kickstarters etc.... and it still can't make money on games? Still subscribes to a business model where they bet the farm that their next game will be a hit? Studios constantly closing or begging for cash from their fans? The whole thing is dysfunctional.

I think the most telling line in John Riccitello's email to staff was,

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You are now generating more revenue on fewer titles by making EA’s games better and bigger.

I was a bit surprised by that; why would you be proud of producing fewer games? However, I guess when you are dealing with those sums of money, this is the only business model that makes sense...you need to reduce the risk. See also Ubisoft, who seem to be making the same game every time (Assassin's Creed, Far Cry 3) - I admit though that this is hearsay because I haven't played any AC games since the first one left me in a boredom-induced coma.

It's an exaggeration to say that we can strike the big companies off the list if we want meaningful gaming experiences - 2K, for example, are still making good games. But anything that requires a big marketing budget in order to sell 2-5m copies has to make concessions in that it has to try and appeal to everyone.

I'd be one of the people that would advocate indie/15$ games that last a few hours and deliver interesting experiences. We did see Sony embrace that model last year with some interesting games of that type showing up on PSN, and maybe with the new PC-architecture we'll see more stuff from the PC Indie scene coming across.

In some ways I'm hoping that the video game industry is ready to follow it's own business dynamics, because I noticed (and I only speak for myself) that in the past decade the movie industry seems to have had a terrible effect on game production, and design... games trying to mimic the blockbuster formula of what works and doesnt. I think that's the wrong line for games to be in, chasing after a pseudo movie like experience.

I dont think it's much different than the effect Star Wars had on Sci-fi cinema-

you got alof of crap sci-fi films for the next 10 years, where production values came first, and everything that makes a film good came second-

only because Star Wars made people say 'That's the way to do it', 'that guy made millions', 'look at the visuals'.... while ignoring the obvious facts that Star Wars was lightning in a bottle, and impossible to recreate by simply copying it.

To be more precise: Watching films to figure out game design makes about as much sense as listening to music to figure out how to light a stage play. There's influences there, but not the artistry.

The art of games is controls, user interface, tone.... and visuals and sound are kinda secondary. Games can have lousy visuals and still be fun and involving.

Anyway- Im getting offtopic, but hopefully I made my point, enough with this chasing Hollywood bullshit.

I'm sort of torn when it comes to LucasArts. I remember the company when it was in its prime, but how many people still playing games today can say that? Today LucasArts makes mediocre Star Wars games, both online and off. This is the company that made a Star Wars fighting game for crying out loud. It's fall from grace began long ago and sales of its titles are camouflaged by its popular Lego Star Wars and Lego Indiana Jones titles and the hype for this Star Wars 1313. I think when it comes down to it you can dismiss this closing as the unfortunate consequence of a merger. Disney looked at the balance sheet and saw what was making money and what wasn't. LucasArts was carrying its weight. Still sad though.

I hated to see LucasArts go, but I thought it was a pretty poor decision to abandon the very popular KOTOR and Star Wars Battlefront games. Battlefront 3 was supposedly pretty far along in development, before being canned for The Old Republic. The failure of SW: Galaxies should have been a big enough sign that a Star Wars MMO wasn't a good decision, no matter who was developing it.

It's a good point about trying to copy Hollywood being the wrong way to go, but as you say, it's more 'follow the money' and the perceived way of making the most money (cinematic blockbusters).

It's weird, I'm playing RDR at the moment, a critically acclaimed game. The actual gameplay in that game is pretty terrible - cover-based shooting for the most part- and the game's strengths are all in the cutscenes, dialogue when travelling to missions, and the game world and characterisation - all Hollywoody stuff. I'm glad we have this type of game - but developers seem to continually over-reach in an effort to get there; both this and LA Noire were beset with development problems. Even Rockstar are running into trouble with the cinematic action game (Max Payne too) recently but they still manage big sales.

I think the issue with developers following their own business model is that they have very rarely shown that they can do that. There seems to be a massive disconnect between the business people and the developers, and you have to think that there is a very incompetent strata of middle management in there somewhere that is not able to forecast their sales properly, understand the complexities on each side (accountants won't understand development, and developers may struggle with planning/budgeting), or deliver projects on time/budget.

This is all conjecture on my part based on general gaming press reporting of course. I work in software, and am full of amazement and admiration at what developers achieve, and the relatively bug-free products that ship. I think there is an incredible industry there that needs better management.

Good article on Eurogamer yesterday about it. Amazing that Square forecast 15m sales over their three big releases.

good points, and I think the problems are exacerbated by EAs product line being so narrow in terms of what they offer. I bet their 'canon' guidelines for shooters, sports games, and sims are probably mini-bibles...

Take Two's full year results to Mar 13 make interesting reading. This is the company with perhaps the strongest stable of franchises.

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Borderlands 2, meanwhile, shipped 6 million copies since September, NBA 2K13 shipped 5 million since October and Max Payne 3 shipped 4 million since last May. The company was quiet about sales of XCOM: Enemy Unknown.

Take-Two ended the year with a net loss of $29.49 million (£19.01m), a significant improvement on last year's $108.82m (£70.17m) deficit.

The games themselves were madly profitable, if taken on their own terms. But 260M on Sales & Marketing and 150M on G&A (non-development staff salaries, rent, utilities, travel etc) looks to be a massive drag on the company. If you commit all that money to marketing and your game bombs, then you're in trouble.

Take Two's full year results to Mar 13 make interesting reading. This is the company with perhaps the strongest stable of franchises.

The games themselves were madly profitable, if taken on their own terms. But 260M on Sales & Marketing and 150M on G&A (non-development staff salaries, rent, utilities, travel etc) looks to be a massive drag on the company. If you commit all that money to marketing and your game bombs, then you're in trouble.

Yeah, that is way too much for Marketing.

They need to cut down on the Cocaine and whores during their promotional meetings.